Fureasu Co., Ltd.

80.5% of net sales (FY2026 (ending March 2026)) depend on insurance-covered services under the medical insurance and long-term care insurance systems, with medical treatment fees generally revised approximately every two years and long-term care fees approximately every three years. If a downward revision is implemented, the resulting decline in service unit prices would reduce net sales, which may have a material impact on business performance and financial position. As part of diversification efforts, the Company has begun offering non-insurance-covered services, but the ratio of non-insurance sales remained at only 19.5% as of FY2026 (ending March 2026).

Both the Directly-Operated Massage Business and Home-Visit Nursing Service are legally required to provide services through holders of national qualifications such as licensed massage practitioners (anma massage shiatsu practitioners) and nurses, making such personnel essential to maintaining and expanding the businesses. Recruiting holders of national qualifications is more difficult than recruiting general personnel, and if there is a shortage of such personnel or mass turnover occurs, it may have a material impact on business performance and financial position. As countermeasures, the Group is improving working conditions and compensation, enhancing education and training, and introducing outsourcing arrangements.

In FY2026 (ending March 2026), the proportion of net sales attributable to insurance-covered services was a high 80.5% of total company sales, resulting in a business structure in which performance is heavily influenced by trends in the medical insurance and long-term care insurance systems. If unfavorable revisions to medical treatment fees coincide with intensifying competition, this may have a material impact on business performance and financial position. The Group is working to diversify risk by expanding non-insurance-covered services, but the reduction in dependence has proceeded only gradually.

The Directly-Operated Massage Business is subject to the obligation to establish and register treatment facilities under the Anma-Massage-Shiatsu Law, as well as billing regulations under the Health Insurance Act and the National Health Insurance Act; violations could result in a business suspension order or an inability to collect service fees. In addition, if a violation of advertising regulations under the Anma-Massage-Shiatsu Law or the Act against Unjustifiable Premiums and Misleading Representations occurs, continuation of the business could become difficult. The Group strives for legal compliance through the development of internal rules and manuals and regular education and training, but such risk cannot be entirely eliminated.

As a designated provider under the medical insurance and long-term care insurance systems, the Home-Visit Nursing Service is required to continuously satisfy personnel standards, facility standards, and operational standards; failure to comply with these standards carries the risk of designation revocation or a business suspension order. If designation is revoked, it would also become impossible to collect service fees, which may affect business performance and financial position. The Group exercises the utmost care to satisfy these standards, but it should be noted that the management burden increases as the business expands.

The Group handles personal information such as users' names and sensitive personal information such as medical history in the course of business, and if a leak occurs due to unauthorized external access or an internal management error, the Group may be subject to claims for damages from users and others, which may have a material impact on business performance and financial position. The Group has taken measures such as obtaining JAPHIC Mark and JAPHIC Medical Mark certification, developing internal rules and manuals, and conducting regular education and training, but such risk cannot be entirely eliminated.

Amid an expected increase in demand for home medical care against the backdrop of an aging society and a decline in the number of hospital beds, new entrants from other industries and business expansion by competitors are anticipated in the home-visit massage and home-visit nursing industries. If competition intensifies, this could lead to higher costs of acquiring users and lower unit prices, which may have a material impact on business performance and financial position. The Group seeks to differentiate itself by directly employing qualified personnel and improving service quality through enhanced education and training systems.

The Group has recorded substantial fixed assets, including lease assets, contract-related intangible assets, and goodwill, and applies impairment accounting. If the profitability of each business deteriorates, impairment losses may need to be recognized, which may affect business performance and financial position. The Group strives to control impairment risk through strict profitability management for each business, but such risk may not be avoidable depending on changes in the business environment.

Because a certain period of time elapses between the submission of medical/care claims and actual receipt of payment, working capital increases as the scale of business expands, requiring fundraising through borrowings from financial institutions or the issuance of corporate bonds. If claim rejections increase significantly, if fundraising becomes difficult due to changes in financial conditions, or if fundraising costs increase due to rising interest rates, this may affect financial position. The Group strives to curb the increase in interest-bearing debt by expediting claim submission operations and improving profitability through cost reductions.

Given the nature of the business, which involves providing services through visits to users' homes and other locations, if a natural disaster or major earthquake occurs, continuation of service provision may become difficult due to damage suffered by employees, users, or business locations. In addition, if an infectious disease such as novel influenza or COVID-19 spreads and employees or users become infected, it may become impossible to provide services through home visits, which may affect business performance and financial position. The Group has implemented infectious disease countermeasures through the development of health and safety manuals and regular education and training, but it is difficult to completely prevent an impact on all business locations nationwide.